Introduction
The very architecture of justice is tested when a crime strikes at the financial core of the nation. When billions are defrauded from the public exchequer through sophisticated schemes, the courts must weigh the gravity of the economic harm against the procedural right of an accused. This pressing conflict between public interest and personal liberty formed the crux of a profound legal examination recently undertaken by the Rajasthan High Court in Nirmal Kumar Sharma Versus Union Of India1. Concluding that serious economic offences, especially those involving massive tax evasion, demand a grave and serious consideration, the High Court has referred to a larger bench the pivotal question of whether arrest warrants can be automatically converted to bailable warrants in matters concerning grave economic crimes under statutes like the PMLA2, Customs, CGST, and other heinous offences under the Indian Penal Code/Bharatiya Nyaya Sanhita.
The anti-social activities of persons in the upper strata, which have become known as “white-collar crimes,” present a unique challenge to the judicial system. As statutes like the CGST Act, 2017, which governs the levy and collection of tax on the supply of goods or services, bring serious economic offences into sharp focus, a fundamental question of procedure confronts the courts. “Can an arrest warrant, issued to compel appearance in connection with grave economic or heinous crimes, be automatically converted into a bailable warrant merely upon the request of the accused?”
The judicial consensus, reiterated across a series of landmark Supreme Court rulings, firmly establishes that economic offences constitute a distinct and more serious class of crime. As observed in Y.S. Jagan Mohan Reddy Vs. CBI3 (2013), such crimes, “having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole.” Similarly, Nimmagadda Prasad Vs. Central Bureau of Investigation4 (2013) stressed that these offences, committed with deliberate design for personal profit, are more serious than ordinary crimes due to their disregard for public interest. Do such severe condemnations not inherently suggest a stricter approach when securing the presence of the accused?
The specific issue stemmed from a case involving an assessee facing charges under the CGST Act for allegedly claiming a massive Input Tax Credit (ITC) of over Rs. 10 crores through the creation of fake firms and invoices. The assessee’s plea to convert the arrest warrants, issued by the Additional Chief Judicial Magistrate, into bailable warrants was rejected at the Magistrate level, a decision upheld by the High Court in its reference order. The core disagreement lay in the assessee’s argument that the offence was minor as it was triable by a First-Class Magistrate and punishable by a maximum of five years, against the department’s unwavering submission that the tax evasion made it a heinous economic offence. But if the law itself dictates that every bail application must be decided on its own facts and circumstances, keeping in mind the nature of the accusation and the severity of the punishment, as held in Nimmagadda Prasad, how can an accused claim warrant conversion as a matter of right simply based on the maximum sentence?
The urgency of this question was further magnified because the High Court found a discernible conflict among its own benches on this very legal point. When different Single Benches of co-equal strength hold conflicting views, which view must prevail, and what is the proper recourse for a subsequent Bench? The Supreme Court, in the Central Board Of Dawoodi Bohra Community and Ors. vs State Of Maharashtra & Anr5. (2005), laid down the inviolable rule of judicial discipline. A larger Bench’s decision is binding on a smaller or co-equal Bench, and if a subsequent co-equal Bench wants to take a different view, it must refer the matter to a larger Bench. Reinforcing this, S.K. Kapoor (Supra) clearly held that a prior decision of a co-ordinate Bench is binding on a subsequent Bench of equal strength, and if a different view is desired, the only legal path is a reference. Recognizing that its own Single Benches had taken conflicting views, with cases like Girdhar Gopal Bajaria (Supra) upholding the seriousness of non-bailable warrants under the PMLA (Prevention of Money Laundering Act), while other judgments failed to take such precedents into account (leading to the potential for judgments per incuriam), the High Court had no other option but to refer the matter to a Special/Larger Bench to ensure uniformity and put the controversy to rest.
The heart of the dispute lies in the interpretation and application of Section 70(2) of the Cr.P.C6. (or the corresponding Section 72(2) of the Bharatiya Nyaya Sanhita (BNSS), which grants a court the power to convert an arrest warrant into a bailable warrant. The fundamental judicial guidance on the use of warrants was established in Inder Mohan Goswami Vs. State of Uttranchal7 (2007), which warns that warrants, especially non-bailable ones, should never be issued casually or mechanically because they involve the deprivation of the most precious right: personal liberty. The Court mandated that a non-bailable warrant should only be issued when summons or bailable warrants would be unlikely to secure the desired result, such as when the person is likely to evade the process of law. However, while acknowledging that personal liberty is paramount, the Court also stressed the need to properly balance both personal liberty and societal interest, concluding that there can be no straight-jacket formula for warrant issuance.
Given that the Supreme Court has consistently characterized economic offences as grave crimes that corrode the fabric of democracy (as per State of Gujarat Vs. Mohanlal Jitamalji Porwal8 (1987)) and are more dangerous to society than ordinary crimes due to their deliberate calculation and breach of trust (Rohit Tandon vs Directorate of Enforcement(2018)), how can a court ignore the accused’s potential to manipulate evidence or evade the process when considering the conversion of a warrant?
The conclusion is inescapable: the inherent gravity of a crime, be it an economic offence or a heinous offence, cannot be ignored when exercising judicial discretion. The High Court, therefore, framed a direct and highly significant question for the Larger Bench. “Whether the arrest warrants issued against the accused committing economic offence or heinous offences like murder/rape/dowry death/dacoity etc. can be converted into bailable warrants as a matter of right of the accused by invoking the powers contained under Sections 70(2) Cr.P.C. and 72(2) BNSS as a matter of right?”The ultimate decision will be crucial, defining the judicial approach to securing the presence of individuals accused of striking at the core of national finance or committing crimes against human life, and determining whether the gravity of the accusation overrides a technical claim to warrant conversion.
Conclusion
The legal tightrope walked by the Rajasthan High Court in this reference perfectly encapsulates the modern judiciary’s struggle to reconcile established criminal procedure with the escalating complexity and severity of financial crimes. By referring the issue to a Larger Bench, the Court did more than merely resolve a conflict between co-ordinate Benches; it acknowledged that the traditional metrics of crime is maximum sentence or the trial forum are inadequate when dealing with systemic threats like massive tax evasion and money laundering.
The collective wisdom of the Supreme Court, through precedents like Y.S. Jagan Mohan Reddy and Mohanlal Jitamalji Porwal, demands that the economic offender, whose calculated actions corrode the “financial health of the Country,” cannot be treated with the same procedural leniency afforded to an accused in a routine, non-economic case. The ultimate determination by the Larger Bench on whether warrant conversion under Section 70(2) Cr.P.C./Section 72(2) BNSS is a matter of right will thus be a defining moment, solidifying the judicial response to white-collar criminality and ensuring that process is not weaponized to evade accountability for crimes against the public exchequer.
This forthcoming decision will carry immense future ramifications for the application of major economic statutes. If the Larger Bench rules that the gravity of economic and heinous offences automatically negates the right to demand warrant conversion, it will significantly strengthen the hands of agencies like the Directorate of Enforcement and the CGST intelligence wing in securing the presence of high-profile offenders. Conversely, any ruling that prioritizes the technical right to conversion might be perceived as a procedural loophole, potentially complicating efforts to bring well-resourced individuals accused of financial fraud to justice.
Beyond the immediate case, this reference compels the legal fraternity to ponder deeper questions: Does the term “heinous offence,” traditionally reserved for crimes against the person (murder, rape), now functionally extend to encompass economic sabotage against the State, warranting identical procedural stringency? And how should courts, in the absence of a “straight-jacket formula,” uniformly apply the principle of balancing individual liberty with the larger interests of the State in an era dominated by transnational financial conspiracy? The answer to the Rajasthan High Court’s query will not only set a precedent but will redefine the delicate equilibrium between Justice and Jurisprudence for all serious crimes in India.
Citations
- Nirmal Kumar Sharma Versus Union Of IndiaS.B. Criminal Miscellaneous (Petition) No. 1947/2025
- Prevention of Money Laundering Act, 2002
- Y.S. Jagan Mohan Reddy Vs. CBI 2013 (7) SCC 439
- Nimmagadda Prasad vs. Central Bureau of Investigation 2013(7) SCC 466
- Central Board Of Dawoodi Bohra Community and Ors. vs State Of Maharashtra & Anr.2005 (2)SCC 673
- Code of Criminal Procedure, 1973
- Inder Mohan Goswami Vs. State of Uttranchal (2007) 12 SCC 1
- Gujarat Vs. Mohanlal Jitamalji Porwal, 1987(2) SCC 364
- Rohit Tandon vs Directorate of Enforcement (2018)11 SCC 46
Expositor(s): Adv. Anuja Pandit
